Taiwan may fall behind on trade

By Julian Kuo 郭正亮 /

Sat, Nov 30, 2013 - Page 8

The US government has been heavily promoting next month’s ministerial meeting of the Trans-Pacific Partnership (TPP) in Singapore. US Vice President Joe Biden is scheduled to embark on a trip to Japan, China and South Korea on Monday.

One observer says that the purpose of Biden’s Japan visit is to tighten the nuts of the two countries’ ongoing TPP negotiations in the hope that Tokyo will make some final concessions on the trade barriers that it uses to protect its farming sector.

Japan has already bowed to pressure from other TPP partner countries by agreeing to scrap 95 percent of its import tariffs. That is a big advance over the trade liberalization rate of 83 percent to 85 percent that Japan offers under its existing free-trade agreements (FTA), but the US wants to see between 95 percent and 100 percent trade liberalization by all TPP partners, except for Vietnam. That makes Japan’s position relatively conservative.

Japan had thought that the US would not encroach on the forbidden territories that it wants to protect — rice, pork, beef, dairy products and sugar. However, Japan’s hopes have been dashed, and some partner countries such as New Zealand, Australia, Singapore and Chile have even indicated that they will propose zero tariffs for all these goods.

Meanwhile, on Nov. 18, South Korea and China decided during the second stage of talks on their proposed bilateral FTA to include the service sector in the negotiations. South Korea’s plentiful experience in negotiating FTAs has allowed its FTA talks with China to move forward quickly.

Since talks started in May last year, the two sides have held eight rounds of negotiations. They have already reached consensuses on issues like trade liberalization in agricultural and aquatic goods, government procurement agreements and trade diversification, and they plan to further strengthen their cooperation in services such as culture, logistics and healthcare. The two sides expect to bring their negotiations to a conclusion by the end of next year, if not sooner.

Negotiations on the TPP and the South Korea-China FTA are likely to be completed this year and next year respectively. They will both have a tremendous impact on Taiwan, but Taiwan seems to be in an otherworldly state, with absolutely no sense of impending crisis.

Not long after President Ma Ying-jeou (馬英九) started his second term last year, he said that Taiwan would try to join the TPP within eight years. Eight years! That will be long after Ma has finished his second term and left office.

Ma’s go-slow attitude stands in marked contrast to that of Japanese Prime Minister Shinzo Abe, who decided to join the TPP negotiations immediately after his Liberal Democratic Party came out on top in July’s election for the Japanese parliament’s upper house — the House of Councilors — and those negotiations are now close to completion.

The fact that Vietnam will soon enjoy customs tariff advantages under the TPP is prompting a new wave of moves offshore by Taiwanese textile mills, yet the government has no idea what to do about it.

If and when Taiwan joins the TPP, it will certainly involve allowing more imports of agricultural products, notably US pork. However, this prospect is taboo for Taiwan’s main governing and opposition parties, who dare not even mention the issue.

To make matters worse, the snail’s pace of negotiations between Taiwan and China on follow-up agreements to the Cross-Strait Economic Cooperation Framework Agreement (ECFA), plus the opposition parties’ inevitable negative reaction to anything involving China, may allow the South Korea-China FTA to overtake the cross-strait trade liberalization process. That would give South Korea’s exports to China better tariff advantages than those accorded to Taiwan, and if that happens, Taiwan’s economic climate will go from bad to worse.

Although the TPP is likely to be finalized by the end of this year, followed next year by the South Korea-China FTA, Taiwan’s government and opposition still refuse to contemplate the risk of Taiwan getting marginalized by these regional agreements. They dare not talk about the problem of increased farm-product imports that is bound to come up with TPP negotiations, nor are they willing to face up to the impact that the South Korea-China FTA will have on Taiwanese industry.

It is a tragedy for Taiwan that our politicians are so blind to the unprecedented changes taking place in East Asia, and that they cannot offer any answer to the ongoing trend of manufacturers closing their factories in Taiwan and setting up business elsewhere.